When the words innovative and sustainable are thrown together, minds can quickly cloud over and as ideas beyond our understanding are bandied about by people who clearly know far more than us.

Throw housing into the mix and pound signs immediately start to jump up and down in front of our eyes as you calculate just how much those solar panels are going to cost and if they're really worth all the bother. But sometimes it's the simplest things that can provide inspiration.

It aims to combine high energy efficiency with people's preference for traditionally designed buildings; after all, although not everyone wants to set up home in a futuristic-style property, many will jump at the opportunity to live in something that has period qualities but with a modern twist.

Constructed from natural materials including aerated clay block, lime based renders and plasters, and insulation using compressed wood fibre and sheep's wool, the BRE believes the shell of the house offers energy efficiency and good indoor air quality. Moreover, the simple design and potential quickness of build - faster than traditional brick and block - is designed to appeal to an increasingly eco-aware homebuyer.

All good you might think but what really makes the Prince's House so appealing is its versatility; the building can be adapted to suit specific requirements. For example, it could be subdivided to include a family home with a maisonette or a flat, which as the BRE says will "reflect changing demographics and people's needs over the long term".

Where does Diarmuid Gavin fit into this? Well, the one-time Gardeners' World presenter was naturally interested in the area around the house. Sustainability extends beyond the clay walls of the Prince's House and Gavin was highlighting the importance of outdoor space as part of the whole footprint. Vegetation has been chosen to fulfil specific tasks, such as hawthorn bushes planted around the front boundary to capture dust and air pollutants from the roads whilst at the same time providing sound insulation for the house. Simple but innovative.

“The House garden mimics the structure of surrounding woodland," Gavin says, "featuring native planting that works in synergy with natural cycles and the built environment. It has been designed to require minimal maintenance but yield maximum results."

The Prince's House is just one of eight at the BRE Innovation Park aimed at demonstrating how perceptions of housing can be challenged. Their popularity has reached beyond the UK with a deal signed earlier this year with China to create a park in Beijing similar to the Innovation Park. Just as the Watford site was developed seven years ago in response to "challenging" housing and community legislation, the Chinese are faced with the challenge of delivering 36 million affordable homes in the next five years.

The chief executive of BRE, Dr Peter Bonfield, recognised the double benefit of the deal: "Being involved with the Beijing Green Building Park gives our construction industry a fantastic opportunity to showcase their products and services in a housing market that has predicted growth on an unprecedented scale."

The Triangle development in Swindon

The UK also has housing issues, with some commentators thinking the problem runs deep. Design expert and TV presenter, Kevin McCloud, says that the country is facing "a great crisis in housing". In 2011, 14,000 people built their own homes but that was just scratching at the suface of the problem; in 2007 the then-government pledged to build three million new homes by 2020 with emphasis on affordability and sustainability. The current administration has similar ambitions but with only 105,000 homes built in 2010-11 - the lowest figure since the 1920s - there is much to do.

McCloud sees individuals building their own homes as part of the solution but even with land values dropping 17% over the past three years, the average price for a plot of land is still £212,000. As he explained recently, he believes communities coming together to pool finances in order to buy land at reduced rates is one option. In fact, community is a strong element of his philosophy for innovative and sustainable housing, demonstrated by his development project, HAB (Happiness, Architecture, Beauty), that works with other organisations to create neighbourhoods with forward-thinking housing that is also affordable.

If the Triangle represents sustainable innovation that is affordable, a German manufacturer is offering visions of 21st century living at a far higher price range. Huf Haus provides a pre-built home system with houses based on modular design that allows a property to be placed on a plot virtually complete.